Sunday, September 29, 2013

Mises' 132nd Birthday

Once again, as George Reisman reminds us, September 29, 2013 is the 132nd Birthday of Ludwig von Mises. I always enjoy reading Reisman’s tribute to Mises on the occasion of his 100th birthday.

Reisman says "Mises is important because his teachings are necessary to the preservation of material civilization," which depends upon the division of labor.

Reisman points out how the division of labor operates under the "invisible hand" of Divine Providence (though Reisman doesn't use those terms). Under the division of labor, every single person has a distinct, specialized role to play in the economy. One man programs a computer, another man sweeps the floor at night, goes to school during the day, and hopes someday to invent an even faster computer. Every member of the body has a function, and everyone plans out his own life, adjusting his plans in harmony with the plans of others.
Economic planning, von Mises showed, requires the cooperation of all who participate in the economic system. It can exist only under capitalism, where, every day, businessmen plan on the basis of calculations of profit and loss; workers, on the basis of wages; and consumers, on the basis of the prices of consumers’ goods
Socialism makes economic calculation, economic coordination, and economic planning impossible, and therefore results in chaos.
The failure of socialism, he showed, results from the fact that it represents not economic planning, but the destruction of economic planning, which exists only under capitalism and the price system.
"The Government" creates chaos, shortages, poverty, and mass death. More on anarchic decentralized planning.
Mises demonstrated that competition under capitalism is of an entirely different character than competition in the animal kingdom. It is not a competition for scarce, nature-given means of subsistence, but a competition in the positive creation of new and additional wealth, from which all gain.
In a capitalist society, von Mises showed, privately owned means of production serve the market. The physical beneficiaries of the factories and mills are all who buy their products. And, together with the incentive of profit and loss and the freedom of competition that it implies, the existence of private ownership ensures an ever-growing supply of products for all.
The opposite of the "division of labor" is isolationism, "survivalism" and bare subsistence.
The existence and successful functioning of the division of labor, however, vitally depends on the institutions of a capitalist society—that is, on limited government and economic freedom, private ownership of land and all other property, exchange and money, saving and investment, economic inequality and economic competition, and the profit motive—institutions everywhere under attack for several generations
Mises is correct, but doesn't go far enough. These "institutions" in turn depend on religion and morality, a subject Mises avoided. Each of these institutions depends on a shared moral condemnation of theft, the initiation of force, and each of "the seven deadly sins," such as envy, as well as the social endorsement of virtues like "the Protestant Work Ethic." A great leap forward in human progress will be made when we restore a general understanding of the Biblical position that currency debasement is an act of violence against the poor.

Mises was a materialist. He accurately described how society materially prospers under freedom from the initiation of force. He did not -- and could not -- explain why, if John Maynard Keynes was right, and "in the long run we're all dead," there is any reason (or moral argument) against seizing power and becoming a socialist or fascist central planner, profiting in the short run, while destroying civilization in the long run.

Capitalism, or the Free Market, is what George Washington, in one of the most famous addresses in American history, called "national morality":
Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports. In vain would that man claim the tribute of patriotism who should labor to subvert these great pillars of human happiness—these firmest props of the duties of men and citizens. The mere politician, equally with the pious man, ought to respect and to cherish them. A volume could not trace all their connections with private and public felicity. Let it simply be asked, "where is the security for property, for reputation, for life, if the sense of religious obligation desert the oaths which are the instruments of investigation in courts of justice?" And let us with caution indulge the supposition that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar structure, reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle.
Thanks to Lew Rockwell and the Mises Institute (and Ron Paul), Misesean (or "Austrian") economics are experiencing something of a resurgence. But without a Christian foundation, this resurgence (wrong word, actually, since there never was a "surgence" to "re-" about) will be short-lived.

Most Christians today are ignorant of Keynes and his philosophy of "in the long run we're all dead." But Christians are even more ignorant of the battle of Clapham vs. Bloomsbury. William Wilberforce was a member of the Clapham Circle, seeking to abolish slavery and reform culture along Biblical lines. Keynes was a member of the Bloomsbury circle. Although the homosexual Keynes shared the Bloomsbury vision that economist Joseph Schumpeter delicately referred to as a "childless vision," it was not without a future orientation. Keynes recalled the Bloomsbury days:
It was exciting, exhilarating, the beginning of a renaissance, the opening of a new heaven on a new earth, we were the forerunners of a new dispensation, we were not afraid of anything.
This is a religion which is a mirror-image of the Christian religion. The lines were vividly drawn by Aldous Huxley, grandson of "Darwin's Bulldog," Thomas H. Huxley:
I had motives for not wanting the world to have a meaning; consequently assumed that it had none, and was able without any difficulty to find satisfying reasons for this assumption. The philosopher who finds no meaning in the world is not concerned exclusively with a problem in pure metaphysics, he is also concerned to prove that there is no valid reason why he personally should not do as he wants to do, or why his friends should not seize political power and govern in the way that they find most advantageous to themselves. . . . For myself, the philosophy of meaninglessness was essentially an instrument of liberation, sexual and political."
It is a great irony that Keynes and his ilk have a passionate long-term religious vision, while Mises and his secular followers have no lasting foundation for a humane society. In the long run, secular Miseseans are dead.

Human society and material prosperity are intensely dependent on Christian morality. And the adoption of Christian morality depends upon the regeneration of the human heart. If you pray for capitalism, pray for revival.